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Economy in Brief

Texas Factory Sector Index Retreats; Expectations Are Mixed
by Tom Moeller  September 24, 2018

The Federal Reserve Bank of Dallas indicated in its Texas Manufacturing Outlook Survey that the General Business Activity Index fell to 28.1 during September, the lowest level in four months. Despite its recent sideways movement, the index remained up y/y.

Movement amongst the sub-series was mostly negative last month. The production, shipments, new and unfilled orders readings weakened significantly. The delivery times index declined sharply and showed the quickest product delivery speeds in six months. The capital expenditures reading cratered m/m to the lowest level since November.

On the labor front, employment reversed its recent improvement with a decline to the lowest level in six months. The workweek also weakened to a six-month low. Remaining strong was the wages & benefits figure, which stayed near the highest level since January 2007.

The index for finished goods prices received added to its recent declines and fell to the lowest point since August 2017. The raw materials price measure also weakened to a four-month low.

The index of expected business conditions in six months improved m/m, but movement amongst the sub-series was mixed. Expected production, shipments and, new orders growth eased, but the unfilled orders reading improved. The future capital expenditures reading eased slightly, but remained elevated.

The future employment reading fell slightly from the highest level since January. Future hours worked held steady, but were down sharply from its high twelve months ago. Future wages & benefits surged to the highest reading since 2004.

Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report rising activity, an index will register 100. An index will register -100 when all firms report a decrease. An index will be zero when the number of firms reporting an increase or decrease is equal. Items may not add up to 100% because of rounding. Data for the Texas Manufacturing Outlook can be found in Haver's SURVEYS database.

Texas Manufacturing Outlook Survey (SA, % Balance) Sep Aug Jul Sep'17 2017 2016 2015
Current General Business Activity Index 28.1 30.9 32.3 21.7 20.6 -8.9 -12.5
   Production 23.3 29.3 29.4 20.4 20.2 2.4 -1.0
   Growth Rate of New Orders 11.5 19.9 17.0 11.5 11.4 -7.3 -11.8
   Employment 17.7 28.9 28.9 16.7 11.4 -4.9 -0.4
   Wages & Benefits 33.0 33.4 32.4 26.8 22.2 17.6 16.5
   Prices Received for Finished Goods 13.6 15.3 22.9 18.1 12.7 -1.6 -8.5
General Business Activity Index Expected in Six Months 38.0 34.7 36.2 33.9 34.5 8.9 4.1
   Production 43.7 46.6 50.6 46.4 46.8 35.8 31.1
   Growth Rate of New Orders 37.2 40.4 35.1 35.6 37.7 24.3 20.7
   Employment 39.4 42.2 39.9 41.2 35.2 16.8 14.7
   Wages & Benefits 57.4 45.5 53.2 39.7 43.4 34.8 33.2
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